A new Center for Global Sustainability (CGS) research study, published in Applied Energy, examines the local and wider impacts of either opening new coal-fired power plants or shutting them down and transitioning to clean energy sources in the United States and China. The study, led by CGS Assistant Research Director Jiehong Lou, offers crucial insights that support a just transition from coal to clean energy and address the social and economic challenges faced by countries like the United States and China. The study finds that while China's coal industry supports the creation of local jobs, China’s transition to renewable energy results in job losses; in contrast, the United States experienced negative impacts on employment as coal plants closed in the period prior to 2015, but after 2015, when the United States introduced new federal and state-level policies supporting clean energy, employment opportunities in the clean energy sector increased as coal plants closed.
Achieving global climate commitments, along with capping global temperature rise, is contingent on a swift coal phase-out, especially in key global coal economies. As the world’s largest coal consumers, China and the United States, are grappling with the dual challenge of reducing coal dependency while ensuring an equitable transition for affected communities. Both countries have made significant commitments to shift away from coal in their latest nationally determined contributions (NDCs). However, the pathways each country is taking in the clean energy transition diverge dramatically, potentially posing significant economic and social challenges in coal-dependent regions.
“For countries reliant on coal, such as India and Indonesia, implementing just transition policies and fostering alternative employment opportunities will be crucial in navigating the shift away from fossil fuels, ensuring environmental sustainability and social equity,” said Jiehong Lou, CGS Assistant Research Director. “This research provides a vital framework for understanding economy-wide impacts of coal dependency, especially on employment, and offers a pathway for policymakers to navigate the complexities of transitioning toward sustainable energy solutions.”
The analysis reveals a stark contrast between the United States and China regarding employment impacts from coal power plants and their phase-out: in the United States, where the closing of coal-fired power plants only leads to minimal increases of approximately 10 jobs per clean energy plant. On the other hand, in China, opening new coal plants generates a significant boost of approximately 7,351 jobs per plant. While in the United States, coal plant closures yield only 0.04% in job increases for the average county population, new plants in China represent about 1.48% in local job creation. This outcome in the United States can be attributed in part to its effective federal and state policies, such as the Assistance to Coal Communities and Executive Order 14008, both of which promote job creation and economic revitalization in regions affected by coal transitions. Understanding these dynamics is crucial for policymakers as they navigate energy transitions, highlighting the economic potential tied to energy infrastructure development.
"As we face the urgent need for a global shift away from coal, the U.S. provides a roadmap for China and other developing countries to foster a sustainable energy future,” said Guangxiao Hu, CGS Postdoctoral Research Associate. “Our analysis highlights the challenges and opportunities to help these major coal consumers transition from coal to sustainable energy sources without exacerbating economic vulnerabilities.”
Additionally, the average capacity of coal plants and employment metrics differ between the two countries. Key findings reveal that the average capacity of Chinese coal plants is about three times greater than that of U.S. plants, with significant differences in employment factors as well. Notably, adding 100 MW of capacity to an existing plant in China generates an additional 886 jobs in the secondary industry (manufacturing and construction). To effectively support China and other coal-reliant countries as they transition away from coal, policymakers must provide targeted support to better guide global efforts toward sustainable energy solutions, fostering economic resilience and growth.
“Just energy transition is one of the key topics for U.S.-China collaboration, as both countries have a large workforce in the fossil fuel industry and need comprehensive strategies and support systems for communities in transition,” said Ryna Cui, CGS Acting Director. "As both countries chart their courses, the analysis highlights unique challenges and opportunities for policymakers regarding economy-wide employment impacts, enabling the development of nuanced, context-specific strategies for energy transition."
Although the continued development of coal plants complicates the transition away from coal, it also brings significant local impacts. Each newly established plant generates approximately 7,433 jobs in China, igniting a ripple effect across local economies and related industries, creating new employment and economic opportunities. The study finds that a single coal plant can boost overall employment by over 2,056 local jobs in China. Conversely, in the United States, local communities witness an increase of 1,814 new jobs with each plant closure as new energy facilities come on line. However, neighboring regions often experience job losses, highlighting a complex interplay between local gains and regional declines in the transition away from coal.
The study shows that a well-managed transition from coal can protect and boost employment with strong policy support. While China's coal plants increase local jobs, the country must manage potential job losses during its shift to renewable energy. Conversely, closing coal plants in the United States correlates with increased overall employment, suggesting that proper policy interventions can contribute positively to this transition. Although it's difficult to directly attribute these policies to facilitating a just transition, this study’s findings show that they do not impede the employment aspect of a just transition, particularly in regions dependent on coal power generation. By learning from each other, China and the United States can lead toward a sustainable energy future that empowers communities and fosters growth.
Read the analysis to learn more.
